Tag Archives: Health Care Reform

June 7, 2012

More Money! Insurance Rebates On the Way!

By Paula L Wilson, RHU, REBC

PPACA requires health insurers to maintain specific loss ratios.  If an insurer spends more than 20% on non claims related expenses, they need to provide rebates to the insureds. (15% for large employers).  Sounds great!

This portion of PPACA went into effect for premiums paid starting 1-1-2011.   The deadline for calculating and returning your overpaid 2011 premiums is August 1, 2012.  Many of you have already seen communications letting you know where your insurer stands on this issue.

FOR EMPLOYERS

Employers need to start thinking about how they are going to handle this refund check.  For some employers this may not be a daunting task. For others, not so easy.   You need to remember that premiums are plan assets and need to work for the member of the plans.  The law does NOT allow the employer to pocket those premium refunds unless the employer paid 100% of the premiums with no employee contribution.  Let’s consider some of the rules for the use of these rebates when any level of employee contribution is involved.

The employer has three options when dealing with the rebate.  Simply stated, they can offer:

  • A Cash rebate
  • A Reduction in future employee contributions
  • An Increase in future benefits

The DOL is discouraging Options 2 and 3 unless the cash rebate is just too expensive to process.

You aren’t going to cut everyone a check and be done with this.   Premiums that were originally deducted from the employees paycheck on a pre-tax basis will be given back to them as a taxable event.  If you use it to reduce future premium deductions, you will save that accounting step.  Either way, it’s fairly easy for you to deal with.

The fun part for employers is going to be deciding how to divvy up the money.   The money must be returned to the employee proportionally  the way the premium was collected.  Also, the money has to go back only to the employees that were participating in the plan that is providing the rebate.   Let’s say you have two insurers in play and both of them give you a rebate.  Of course the rebates won’t be the same.   Your process needs to go like this, per carrier:

  • Who will get a rebate?  You will need to go back and see who was on the plan IN 2011.  Don’t fall into the trap of looking at your current invoices.  You have certainly experienced open enrollment and some employees have changed coverage.
  • How were they covered?  Were they in the same bracket all year?  Did they add dependents?  Did they experience an age change?  You can’t look at one invoice to determine their annual contributions.  You can’t even look at the payroll unless it specifies the insurer for each employee each month (if more than one insurer is in play).
  • Terminated employee money does not have to be returned to the terminated employee.  But, it does have to be evenly distributed the remaining employees still participating in that plan.
  • How will you distribute this rebate to them?  Cash or reduction in future payroll deductions.

The insane thing about this process is that rebates are expected to be very small.  Even in States with really inept actuaries, average rebates are expected to average $44 per employee for small groups and $14 for large groups.  That is a ridiculous amount of work for the benefit.  But employers must rebate the money.

FOR INDIVIDUALS

Individual policyholders have to pay a bit of attention as well?   If the individual paid for their health insurance with post tax dollars, there is nothing to discuss.  Cash the check.   But if the you wrote off your health insurance premiums, you will now need to pay tax on the returned premium.  Again, a ridiculous exercise for a small amount of money.

As the June 25th SCOTUS expected opinion date looms closer, employer must continue to plan as if everything is staying in place.  PPACA’s impact on employers and the added responsibility to follow numerous new regulatory hurdles is not something you want to be scurrying around for this fall.  Be prepared, pay attention and be prepared to act.

In our next blog we are going to review what we already know about the W-2 regulations that will be in effect for all W-2’s issued after 1-1-13. (for 2012 tax year)

Paula L. Wilson, RHU, REBC

Elections have consequences!

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May 30, 2012

Health Care Reform Is Here To Stay (And YOU better plan on it)

By Paula L Wilson, RHU, REBC

No one seems to want to talk about it.   But it is almost here and you will be affected by it.  It is time to seriously start paying attention.

For Everyone:  There are reports from all directions that confirm what I keep saying:   Health Reform isn’t going away.   Many states are just waiting to enact Plan B.  Just this week Peter Lee, the Executive Director of the California Exchanges said:   “The shape and speed and nature of that effort may change a little.  We need to see, how do we adjust course after that decision.”   As a matter of fact, there is talk around Sacramento that the State just might go ahead and write their own individual mandate.   And why not?  Massachusetts did it and there isn’t any law on the books in California stopping them.    If the entire Federal Law gets thrown out in the severability issue, employers better not take a deep breath.   California would be the one State you could bet on to go after the employers.   After all, someone needs to fill up these insured pools with money so the claims can get paid.

For all Employers:  Employers who continue to ignore the reality of the situation are going to be unpleasantly surprised.   Even if the Individual Mandate is struck down by SCOTUS, the Employer Mandate will remain.  Large employers will have to make some decisions.  They may be inclined to pay to the $2,000/$3,000 fine per employee to un or underinsure, but they should be considering the entire picture when making those decisions.  Even small employers will be affected.  They are going to be inundated with employees looking for answers.   Who else are they going to ask?   Small employers not subject to the employer mandate will be analyzing which way to go with their benefits in the future.   They aren’t just going to lose all of their employees to the competition without some consideration.

Between the employees and HR, employers better have a benefit agent with some knowledge and history of being on top of benefit legislation knowledge.   Determining how to keep employees while rationally taking advantage of the individual and group subsidies will take some finessing.   Avoiding regulatory hurdles from the IRS, HHS, DOL and the new slew of agencies is going to be fun for all.

For the Average Consumer:  If the Individual Mandate fades away, rates are going to rise.   And they are going to rise like there is no tomorrow.   Does this sound like it’s going to end well?  When all is said and done PPACA is going to be the death knell of the current system.   A death that was premeditated by the U.S. Congress over time.  Forbes did a great article on the incidents leading up to the end desired result.  For the good of my profession and general public, I really hope the professional insurance agent survives in a manner in which they can remain in business.  I think the need for assistance is going to increase exponentially.

For Insurance Professionals:  Insurance agents making a living sells on rates and not taking this profession seriously are going to be in a world of hurt.   You can wish all you want, the California Exchange isn’t going away.  And remember, for an individual to get a subsidy, they have to purchase their insurance from the Exchange (If and how you can sell it remains to be set in stone).  Mr. Lee went on to say, “It’s misleading and not productive to just look at all of the ‘what-ifs,'” Lee said. “California will address the needs of Californians. And that includes the exchange.”    There is one “what-if” we don’t hear them talking about.   “What-If” national leadership changes and the Federal Funding to the States goes away.

Now, anyone with any institutional knowledge knows how well the State can compete with the private market in the absence of Federal Funding.   Mr. Lee can hope all he wants, unless they get the Federal Funding to support the premium subsidies…….well, game on.

Paula Wilson, RHU, REBC, Southern California Insurance Agent and Benefits Consultant

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May 23, 2012

$5,000 Health Insurance Subsidy…for you?

By Paula L Wilson, RHU, REBC

While PPACA is simmering in the Supreme Court, the U. S. Treasury Department has been busy defining who will be the recipient of the Health Insurance Premium Tax Credits (HIPTC).   These new regulations were published last week and can be seen in their entirety here.

Who gets the subsidy?

As PPACA outlines, individual and families with incomes from 100% to 400% of the Federal Poverty Level (FPL) are eligible for the credit.   (In 2011 dollars, eligible incomes would fall between $22,350 and $89,400)  A recent estimate from the Congressional Budget Office (CBO) puts the average credit in the area of $5,000.    With the latest cost estimate for family coverage topping the $20,000 level this year, many will find this a welcome relief.   (How are you doing so far?)

Eligibility will be determined by the difference between the “benchmark plan” and the amount your contribution is expected to be.   Now stay with me on this.   The “benchmark plan” will be the second lowest (or Silver) plan offered through the Exchange.   Your contribution will be calculated between 2% to 9.5% of your annual income depending on where you stand on the FPL scale.

But what will it really cost?

It is hard for industry and non industry citizens to envision what this means because PPACA changes everything so radically that the rates you see today and the rates post-PPACA are a mystery.   When you consider the complete lack of underwriting, an unenforceable mandate* and rating restrictions that limit the ratio in premium between an 18 year old and a 64 year old to 1 to 4……your guess is an good as mine.   As soon as the rates are out they will be subject to change at the next legal opportunity.  The effect of the shift in the demographic of the insured public and the dumping of employer sponsored coverage (directly or indirectly from the 9.5% AGI limit) is yet to be seen.

Employer Concerns

PPACA subjects employers to “shared responsibility” penalities if they don’t offer affordable coverage and this set of regulations suggests there are more penalties to come if the employer contribution toward the cheapest plan offered exceeds 9.5% of the the employee’s AGI.  For employers who might pay into Health Savings Accounts (HSA) for their employees, you may be surprised to note that these regulations do state that the IRS will not include the employer HSA contributions into that calculation when determining if the employees coverage is affordable.  This is because HSA contributions cannot be used to pay for group medical insurance premiums and therefore, cannot reduce the “cost” of the insurance for the employee.

As I read this 87 page document my head is reeling with questions of implementation.  It’s almost like these people have never run a business or spent much time working with employers on the intracacies of providing benefits.   Employers who run any kind of benefits program spend money on many health related items in addition to “Health Insurance Premiums”.  Even employer expenses on Wellness Programs may not necessarily be counted as an employer contribution to the health plan.

What?

If you are asking yourself how in the heck the average Joe is supposed to follow all of this, think about how they get through it now and consider this.

Employee Benefits experts and consultants are going to need an entirely new set of expertise in their portfolio to assist employers in determining where to put their benefit dollars.   The lifespan of the Health Insurance Agent is not only under direct attack from PPACA, but the day of the agent who provides “rates only” as a mode of service is over.   Benefit Professionals like our agency will survive as long as we are welcome in the market and not regulated out of existence.

For the individual purchaser, things may get more impersonal.  Government employed Exchange “agents” are going to spend more time calculating your subsidy than worry too much about advising you what is best for you and your family.

Well, it’s not all bad….you might get $5,000!

Paula L. Wilson, RHU, REBC

*subject to SCOTUS decision due in June, 2012.

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March 28, 2012

2014 – Mandates, Exchanges and Executive Carve-Outs

By Paula L Wilson, RHU, REBC

2014 – Mandates, Exchanges and Executive Carve-Outs

Employers have come to me for years asking if they can write a health insurance plan for the Key Employees within their company and exclude the rank and file.   Over the past 20 years there has been as many ways to accomplish that goal as there have been laws passed to prevent it all together.  Therefore, employers that can still afford coverage, continue to offer reduced benefits to all employees and throw in ancillary products as good faith gesture.

Intrusion of government plans have continued to increase the price of group health insurance by eroding the participation.   Healthy Families and expanded Medicaid opportunities drain these employer pools of the healthy young premium payers leaving the higher risk behind to push premium higher.  The implementation of ObamaCare over the next few years is the Gorilla beating on the backs of my employer clients.   The employer mandate and penalties are sending company planners running into the hills looking for cover.

Health Insurance agents desperate to keep agency commissions up are pushing voluntary benefits in hopes of staying in business when their base medical commissions erode or change to a direct-fee basis.   There is nothing wrong with voluntary benefits if the employees can afford those extras in this economic environment.  However, I want my clients and potential clients to understand that we have to work with what it given to us and there may be a workable and affordable solution to the future of their benefits.

The employer mandate has many facets but I would like to focus on just one here today.   There is a penalty that affects employers who offer benefits but whose employee contributions exceed 9.5% of an employee’s adjusted gross income (AGI).  This rule applies to employees that fall below 400% of the Federal Poverty Level (FPL).  The penalty is $3,000 for every qualified employee that goes to the Exchange for coverage.   The exchange will offer those low to mid income employee’s plans with highly subsidized premiums.   If it benefits the employer to have the employee go to the Exchange, why not push them there?

Why not design a plan of benefits designed to attract those Key Employees and charge a premium that intentionally blows the mandate limit of 9.5% AGI at an income level of your choice?   In the end, these employees receive low cost subsidized coverage of THEIR choice from the exchange and your key employees enjoy the plan that will keep them with the company.   Finally, a management carve out plan built to suit!

Of course, all employees are important for any company to succeed.   Those low cost voluntary plans currently on the market could easily become either partially or fully subsidized by the employer for a great set of benefits that every employee to hang their hat on.  Ancillary benefits with a great interactive Wellness Program leads to healthier happier more productive employees.

Will this work for all companies?   Maybe not this exact example, but as well informed educated agents we are here to explore the many ways this new law can be screwed together to make the best of the whatever survives the upcoming HHS regulation or Supreme Court decisions.  Coming up with the perfect plan that will avoid the 2018 Cadillac tax and conforming to new market participation requirements will need to be properly finessed.

Large employers planning ahead should be looking for the right agents for the planning to be done.  Slick marketing and new agents aren’t going to have the institutional knowledge to understand how the road ahead is going to change.

Paula L. Wilson, RHU, REBC

Paula L. Wilson, Inc.

A Professional Benefits agency since 1986

951-694-1009

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February 28, 2012

Bending the Cost Curve: ACO’s – Maybe Ford was on to something

By Paula L Wilson, RHU, REBC

Maybe the American health care system of the past, where people were to be treated as individuals and doctors were allowed to consider each patients personal needs is inefficient.  It is certainly too inefficient to be allowed to go on, so say the academics trying to change a system they know nothing about.  Certainly all aspects of the American health care system are under attack, but the rubber hits the road when you turn into a number and your doctor won’t even be allowed to consider you anything more than a statistic that needs to be pushed to the next column.  Maybe Ford was on to something when he invented the assembly line.

John Goodman of the National Center for Policy Analysis, posted this blog at the NCPA website where a physician is describing what it is like to work within an ACO.  Accountable Care Organizations, the panacea of efficiency for Medicare patients under PPACA.

She states:

I am a Board-certified general internist. I worked for many years for…an Accountable Care Organization. It was factory work: we were interchangeable cogs in a vast machine.  The people who saw patients, especially “primary care providers” like me, were at the base of the pyramid and the bottom of the pecking order.

The future is clear. The management of the ACO — professional administrators, and physicians who see few if any patients — will schedule every moment of every primary provider’s day, critique every decision, continually scrutinize and evaluate every aspect of one’s practice. At my ACO, yes, we were on teams, but given no time to communicate with one another. We were forced to complete clunky electronic records we had no time to read. Despite years of training and experience, we had no input to the system that controlled our lives. We were not respected as professionals. It was demoralizing.

The health policy elite appears to have concluded that the crux of the problem is primary care practitioners, internists included, who are largely ignorant, lazy, and indifferent to their patients’ welfare, and oppose change of any kind. We do not know or care that a diabetic’s hemoglobin A1C should be below 7.

Therefore, we need tight supervision, complex systems of financial incentives and penalties, and frequent “feedback” about our deficiencies. We need electronic records to remind us that our female patients are due for mammograms that we should advise smokers to quit. And we must reach our goals efficiently, using the minimum number of those expensive tests, and managing large panels of patients.  (So we can’t spend much time with anyone.)

I highly advise everyone to set down the burger and fries, get to the gym and plan to be healthy until you drop.  It’s a wonder why we are starting to feel the effects of a primary care physician shortage.  Obamacare isn’t going to do anything to make medical practice any more attractive to our best and brightest.   The best and the brighest that would normally be attracted to Primary Care medicine don’t want to be part of an assembly line.  For that matter, neither do I.

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February 24, 2012

Bending the Cost Curve: Improving Medication Adherence

By Paula L Wilson, RHU, REBC

It may not seem obvious to most, but NOT taking your medication contributes to one of the largest reasons for increased national health care costs.  According to the a 2011 NEHI study, improving patient medication adherence could reduce wasteful spending by $290 Billion.  Of the 187 million Americans taking one or more prescriptions, it is estimated one-half do not take medications as prescribed.

Not taking medication costs over $100 billion in excess hospitalizations.   The most expensive offenders are diabetics and hypertension patients.  A non adherent diabetic spends more than twice as much one that properly manages their disease as instructed.  They also run a 30 percent chance of hospitalization each year compared to 13 percent by their adherent counterpart.

Poor adherence to medication occurs for many reasons.  High out of pockets costs, lack of care coordination and follow up as well as co-morbidities such as severe or persistent mental illness.   Often medications are not taken as prescribed simply due to lifestyle, culture and belief systems.

Solutions revolve around improving care coordination and enhancing patient engagement and education.  With the rapid increase and improvement in the area of HIT (Health Information Technology), managed care programs have really jumped on the bandwagon agressively by reaching out to high risk members to ensure medication adherence and education.   At a very minimum, we see all insurers offering assistance through programs for patients that want to participate responsibly toward better health.

In the end, each individual must become responsible for themself in this area of medication adherence.   We must spread the word that not doing so will continue to escalate the rise in health care costs.

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February 22, 2012

Bending the Cost Curve: ER Overuse

By Paula L Wilson, RHU, REBC

NEHI (New England health Institute) recently published a paper outlining the results of their research that not only points out $700 Billion in needless health care spending annually, but offer solutions to health care providers and the consuming public on how to reverse this trend.

$38 billion is attributed to overuse of ER departments.   This translates to 56 percent of all emergency room visits. This particular assertion hit home for me as a long time insurance agent because it has always been our number one customer service call.  Insureds looking for payment on $1,500 to $5,000 non emergency services rendered by the emergency room. Of course the study isn’t concerned with the bill getting paid but about eliminating the charge completely from the annual national health care expenditure.

The problem is that patients don’t understand the cost.  Even if you are simply using the ER for an ear infection, you are incurring an average charge that is $580 over the cost of the a normal office visit.   The study found that use of the ER for non emergency purposes spreads across all age groups regardless of the level or type of insurance. 

Patients admit they use the emergency room because it is a place to receive immediate care, instant access to all diagnostic tests and feedback before you leave the building.  This instant reassurance isn’t something you can get in one office visit.  The solution hovers around addressed those points.  That is why we see Urgent Care offices popping up in close vicinity to ERs.   Even markets and pharmacies are opening walk in clinics.  Insurance companies offering 24 hour nurse lines are standard but perhaps not used enough.   Even Doctors On Call, allowing phone access to a doctor 24 hours a day has become a popular part of our product line.  The alternatives are there, educatingthe public on the problem, it’s costs, and the solutions are the task everyone can work on now.

Emergency rooms are expensive to setup and and maintain.  They are full of expensive equipment and personel and done so based on expanding demand for services.  Once you hit the emergency room, defensive medicine is going to push those expensive assets into use.  Until the public gets involved and recognizes how society as a whole is pushing up the health care bill, prices aren’t going down anytime soon.

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